Gulf Oil Corporation Ltd Vs ACIT (Telangana High Court)
Telangana High Court held that amount paid towards cancellation of agreement is liable to be disallowed under section 48(i) of the Income Tax Act since the no condition was stipulated in original Memorandum of Understanding hence in absence of contractual obligation the disallowance of said amount is justified.
Facts- The appellant/assessee is a Company engaged in the manufacture of detonators, industrial explosives &, its accessories, and also engaged in the activity of floriculture. padding and manufacture of gypsum walls, panels and sealing boards and also engaged in the execution of contracts for drilling, blasting and excavation. Notably, assessing authority disallowed certain expenditure under Section 143(1) of Income Tax Act, 1961.
CIT(A) partly allowed the said claim of the appellant/assessee, while disallowing the expenditure of Rs.61,00,000/- towards commission alleged to have been paid to M/s Aasia Management & Consultancy (P) Ltd; that the CIT(A) has also disallowed an amount of Rs.69,00,000/-alleged to have been paid to M/s Udhayaman Investments (P) Ltd., for termination of agreement under Section 48(i) of the Act.
The order passed by the CIT(A) in disallowing the said amounts under Section 48 of the Act, was challenged before STAT, however, STAT confirmed the orders passed by the CIT(A).
